Off-Plan Real Estate in Dubai: Benefits of Proper Investment

2:43 pm  |  28.04.2024

Buying real estate under construction is a popular decision among foreign investors. Off-plan projects provide more favorable investment conditions. In this article, we will talk in detail about the benefits of investing in such projects and how to avoid possible risks.

Benefits of Investing in Off-Plan Real Estate

The Dubai new construction market is very diverse. Investors can easily select suitable properties – both in the budget and premium price segments.

The main advantages of purchasing in projects under construction are investment savings and favorable payback conditions. Many developers also offer investors additional discounts and promotions – exemption from paying the DLD registration fee, several years of free service, etc.

Pricing Policy and Installments

The main feature of purchasing new buildings is their lower cost compared to ready-made buildings.

Many developers offer convenient installment payment plans. When booking a property, a deposit is required – its amount usually varies from 5 to 20%. Further payments are broken down monthly. In this case, you pay part before the project is completed, and part after. This offer is especially convenient for those who are not ready to pay the entire amount.

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Great Investment Opportunities

Buyers can expect a faster return on investment when renting out a property. It is influenced by several factors, in particular the location of the project. For example, you can buy off-plan real estate in a popular area with a high ROI percentage – this will allow you to recoup your investment faster. And the cost of objects in the area under construction will increase as it develops.

After the project is completed, investors can rent out the property and receive passive income in the future. The average return on investment in Dubai is 6-8%, with some areas reaching 11%.

Government Participation

Recently, conditions have changed for foreign investors who buy real estate worth AED 2 million (USD 545 thousand) under construction. From the beginning of 2024, investors can apply for a 10-year Golden Visa by paying the developer at least AED 200 thousand (USD 54.5 thousand). For those who buy real estate with a mortgage, restrictions on the payment amount have been lifted. Previously, it was possible to apply only after transferring at least AED 2 million (USD 545 thousand) to the bank.

Thanks to the development of digitalization in Dubai, investors can buy real estate with cryptocurrency. Many large developers are already working with this currency, but you won’t be able to pay directly. Developers conduct transactions with traders and brokers with the necessary licenses.

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Important Details

Entering the new construction market in Dubai requires a meticulous approach. There are certain risks, so to minimize them, we recommend paying attention to the following factors.

Developer’s Choice

A good reputation of the developer is your insurance in the off-plan real estate market. The authority of the developer can be tracked by:

  • financial condition of the company;
  • timely delivery of other developer projects;
  • the quality of previous projects;
  • reviews and reviews on the Internet.

Market Research

Buying real estate under construction is a long-term investment that will begin to generate income only after a few years.

Unfavorable conditions can arise in any market in the world – the value of the asset decreases because of this. This means that the actual market value of the property will not cover the funds invested in it. To avoid this situation, we recommend buying a new building in a growing market. Over the past few years, we have seen positive dynamics in Dubai, which gives us every reason to consider this direction profitable, safe, and promising.

Select Location

Market research will also allow you to understand which areas are most suitable for your needs. For example, if you are planning a short-term rental property, consider Downtown Dubai with popular Dubai attractions or the coastal Palm Jumeirah and Dubai Marina.

Family-oriented areas of Emirates Hills, Al Barari, etc. are suitable for long-term rental – they are located close to educational and medical institutions, surrounded by green areas.

Investment Protection

To protect buyers from project delays and fraud, the Dubai Land Department (DLD) has introduced regulations for developers.

The Real Estate Regulatory Agency (RERA) monitors the implementation of these rules and, if necessary, resorts to some actions. 

According to Law No. 8 of 2007 on Guarantee Accounts for the Construction of Real Estate in Dubai, if the developer does not complete the construction, he is obliged to return the money to the buyers.

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Features of Resale

During construction, property values typically increase. Moreover, investors will be able to profitably sell the residence not only after, but also before the project is completed.

If you plan to resell the residence before the completion of construction, you must pay the developer a certain percentage of the property price – approximately 30-40%. The exact figure differs and is fixed in the purchase and sale agreement.

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